ATHENS — A controversial expedition by a Greek ship to take Palestinian deportees back to Israel has been canceled, a Greek shipping company said today.

A spokesman for the Afroesa Line, owners of the 18,000-ton car ferry Silver Paloma, declined to say why the ship, chartered by the Palestine Liberation Organization, would not be sailing.

The ship had been due to leave Piraeus, adjacent to Athens, next Tuesday, taking about 100 Palestinians to the northern Israeli port of Haifa.

Fuad Bittar, head of the PLO mission in Athens, told Reuters he had heard nothing about the voyage being canceled.

200 Journalists Included

He had said that in addition to the Palestinian deportees, about 120 prominent sympathizers and 200 journalists were expected to be on board.

Israel had asked the Greek government to bar the ship from sailing on grounds it would encourage a continuation of the current Palestinian uprising in the occupied West Bank and Gaza Strip, but Athens refused.

Greek government spokesman Yannis Roubatis told reporters today that Athens had no right to rule on the sailing of a cruise ship.

"The private individuals who undertook the initiative said they want to contribute to a peaceful settlement of the Middle East problem," he said.

Presented With Dilemma

Israeli security sources have said they doubted the navy would allow the boat anywhere near Israeli territorial waters but added that the presence of journalists and clergymen on board presented Israel with a serious dilemma.

Israel has expelled hundreds of Palestinians since it captured the West Bank from Jordan and the Gaza Strip from Egypt in the 1967 Middle East War. The Israelis say deportation is used only as a last resort against anti-Israeli activists when arrest and prison terms have failed to stop their hostile activities.